Archive for the ‘Zimbabwe’ Category

Barclay’s Bank PLC, headquartered in London, has agreed to pay $2,485,890 to settle a potential civil liability for 159 apparent violations of the Zimbabwe Sanctions Regulations (§ 541.201) between July 2008 and September 2013. Barclay’s processed 159 transactions totaling around $3,375,617 to or through financial institutions located in the US on behalf of corporate customers of Barclays Bank of Zimbabwe. These customers were found to have been owned by 50 percent or more, directly or indirectly, by a person identified on the US Department of the Treasury’s OFAC List of Specially Designated Nationals and Blocked Persons (SDN List).

Barclays Bank of Zimbabwe Limited (BBZ) implemented an electronic customer system in 2006 that prevented it from screening beneficial ownership information for its corporate customers. The only information the bank captured was that of the customer, not of any related parties such a beneficial owner of the customer. Over the years the Barclay’s continued to try and find a work around for the issue but it wasn’t until 2013 that system was fixed.

The base penalty amount for these violations was $5,029,000, OFAC released the following they used in consideration when reaching the settlement amount:

OFAC found the following to be aggravating factors in this case:

Although Barclays attempted to comply with OFAC sanctions despite various constraints imposed by the local Zimbabwean authorities, Barclays failed to implement adequate controls to prevent the apparent violations from occurring despite numerous warning signs that its conduct could lead to a violation of U.S. sanctions laws;

Multiple business lines and personnel within Barclays, including supervisory and management staff in the bank’s Compliance and Audit functions, had actual knowledge or reason to know of the conduct that led to the apparent violations (including the bank’s awareness of the limitations of the systems used by BBZ with respect to capturing full information concerning the beneficial ownership of certain of its corporate customers);

Barclays processed 159 funds transfers totaling approximately $3,375,617 that conferred economic benefit to, and provided indirect access to the U.S. financial system for, blocked persons, causing harm to the Zimbabwe sanctions program and its associated policy objectives;

Barclays is a large and commercially sophisticated international financial institution; and

Barclays’ compliance program was inadequate to identify BBZ’s customers as blocked persons and/or prevent the apparent violations from occurring.

OFAC considered the following to be mitigating factors:

Barclays has not received a penalty notice or Finding of Violation in the five years preceding the earliest date of the transactions giving rise to the apparent violations;

Barclays took remedial action in response to the apparent violations; and

Barclays substantially cooperated with OFAC’s investigation by submitting detailed and organized information, and by executing a statute of limitations tolling agreement and an extension to the agreement.

OFAC also considered the fact that the prohibited entities were not publicly identified or designated and included on the SDN List at the time that Barclays processed transactions for or on their behalf.

President Bush put 21 companies on the OFAC “black list” last month after discovering they were financially and logistically supporting the regime of Robert Mugabe, who uses a number of schemes to stay in power and live in luxury while the rest of the Zimbabwe population struggles. Of the 21 companies added to the entity list 14 are based in Britain, 2 in the Isle of Man, and the rest are found in the Democratic Republic of Congo, Zimbabwe, British Virgin Islands, Jersey and finally in Florida.

British based business man, John Bredenkam, who is considered to have been closely tied to Mugabe, has had all of his US assets frozen. Recently an article was released explaining that the UK granted Bredenkamp indefinite leave to remain in Britain, where he operates most of his businesses from an office in Berkshire. The majority of Bredenkam’s businesses located in Zimbabwe include tobacco trading, grey-market arms trading and trafficking, equity investments, oil distribution, tourism, sports management, and diamond extraction. Bredenkam’s spokesperson denies all claims that he or any of his companies operate in the grey market.

A spokesman for HM Treasury was asked what action will be taken against Mr.Bredenkam, “We are considering a range of measures with EU partners in response to the continuing impasse in Zimbabwe, including further targeted measures. Announcing these prematurely would be ineffective.”

Mr. Bredenkam strongly disputes any suggestion he gives the regime funds to help Mr. Mugabe to cling to power. His spokesman said: “Just because he is a Zimbabwean and is based in Zimbabwe and has businesses in Zimbabwe does not mean he provides the Zanu(PF) regime with funds. He employs around 1,500 people in his businesses around Zimbabwe-their remuneration supports approximately 6,000 people. Is he meant to quit and put all these people out of work?”

Two Office of Defense Trade Control (ODTC) Federal Register notices in July modify slightly the rules as they apply to 126.5 proscribed countries Afghanistan and Zimbabwe (If you have trouble remember which countries, use the mnemonic device “proscribed countries A to Z.)” The first amends the ITAR to lift a policy of license denial for defense exports destined for the Afghan Interim Authority (AIA) and the International Security Assistance Force (ISAF). The former is Karzia’s Government and the latter is the US and our allies. As the Notice does not address use of exemptions, one would have to presume that the general proscribed country rule barring use of most ITAR exemptions still applies, even if intended for the AIA and ISAF. The Zimbabwe Notice, in contrast, now allows for the use of the 123.17 temporary exports of firearms exemption, but does not change the overall denial licensing policy for Zimbabwe.

The United States and the European Union (EU) have imposed trade sanctions on Zimbabwe in response to President Robert Mugabe fixing Zimbabwe’s national elections and continuing crackdown against political
opposition. While both the US and the EU imposed sanctions of transfers of military equipment and technology, the EU imposed additional measures targeting President Mugabe.

In the April 17, 2002 Federal Register the Office of Defense Trade Controls suspended all licenses and approvals (i.e., agreements and retransfer authorizations) for Zimbabwe. At the same time, DTC also prohibited the use of any license exemptions in the International Traffic in Arms Regulations for Zimbabwe.

Soon after the corrupt election in Zimbabwe, the EU agreed to impose smart sanctions targeting arms transfers to Zimbabwe and Robert Mugabe.(“Smart sanctions” seems to be the new buzzword in Europe for sanctions
that have a precise target, in this case President Mugabe. The problem with smart sanctions is that the first few times you implement smart sanctions, you seem to be implying that previous sanctions were not “smart sanctions.” Does that mean earlier sanctions were “stupid sanctions,” or maybe just “slow sanctions”? Perhaps past efforts
have been “silly sanctions.” Rumor has it that the Bush Administration, not to be outdone by the EU, already has a plan in place to designate its next trade sanctions as “incredibly brilliant sanctions,” a designation
that just barely beat out “Texas sanctions” in an internal White House debate.

In addition to prohibiting transfers of military equipment and technology, the EU imposed to sanctions on Mugabe and 19 members of his inner circle: 1) The EU froze their assets, and 2) The EU imposed a travel ban on them. The EU also decided to prohibit the transfer of equipment that may be used for internal repression.